Tesco boss Philip Clarke has backed the Clubcard scheme to bring the firm victory against its rivals, even though the hundreds of millions of pounds invested in the programme have so far failed to halt the customer exodus.
The loyalty scheme is estimated to cost Tesco more than £500m a year to run and is often hailed as one of the most sophisticated data-driven loyalty schemes in the world.
But with like-for-like sales down 3.7% in the first quarter – equivalent to 1 million customers spending £25 less a week with the retailer – Tesco has returned to the level of losses it was recording way back in the early Nineties, before Clubcard launched.
However, many in the data industry will no doubt point to the fact that these figures would be considerably worse without the scheme and Clarke claims enhanced rewards are increasing the firm’s competitiveness.
He believes the recent launch of Clubcard Fuel Save scheme, price cuts on important products and home delivery changes, as well as the now free click and collect service will bring dividends.
Tesco also blamed the poor figures on its decision to adopt a long-term view of customer loyalty by scrapping what it called “indiscriminate couponing”. It said: “On promotions, we have chosen to reinvest for loyalty, helping customers manage their budgets on an ongoing basis rather than funding short-term, untargeted promotions.
“This step-down in couponing alone accounts for more than half of our underperformance relative to the grocery market compared to the final quarter of last year.”
Clarke said: “The first quarter has seen a continuation of the challenging consumer trends in the UK, reflecting still subdued levels of spending in addition to the more structural changes taking place across the retail industry. We are determined to lead in this period of change, building long-term customer loyalty and positioning the business to win in the multichannel era.”
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